IDBI board meet on Sept 21 to take up UWB merger

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Sep 14, 2006, 02.00 AM IST

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NEW DELHI: A board meeting of IDBI is slated to be held on September 21 to discuss the Reserve Bank of India’s (RBI) draft scheme for its amalgamation with United Western Bank, bank sources said. IDBI won the race for UWB, pipping over 16 other interested players.

Both the banks have been given two weeks’ time up to September 27 to consider the draft scheme, after which the RBI will take a view on the future set-up of UWB.

As per the draft scheme, IDBI will have to make an upfront payment in cash of Rs 28 per share in respect of every fully paid-up share in UWB to investors on a prescribed date, which will be decided by the government later. Sources at IDBI Bank said though the cost of the merger is around Rs 150 crore, the bank was willing to spend so much since it has acquired a 230-strong branch network. According to the scheme, the payment made to UWB investors will be considered as provision for bad debt. The books and balancesheets will have to be prepared as on September 2. IDBI will discharge all payments to creditors and depositors of UWB while the employees will continue in service and will be transferred to IDBI, the scheme states.

A release issued by the RBI reads that “every savings bank account or current account or any other deposit account including a fixed deposit, cash certificate, monthly deposit, deposit payable at call or short notice or any other deposits by whatever name with UWB, IDBI shall open with itself on the prescribed date a corresponding and similar account in the name of the respective holder(s) thereof crediting thereto full amount including interest to the extent payable under the scheme”.

(This article was originally published in The Times of India)

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